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Asia Times
3 days ago
- Business
- Asia Times
Red flags rising over China's trade surplus with Indonesia
Indonesia's widening trade deficit with China has evolved into more than an economic concern—it now poses the risk of becoming a destabilizing fissure within the country's social fabric and, by extension, ASEAN's regional stability. According to Indonesia's Central Statistics Agency (BPS), between January and April 2025, Chinese imports to Indonesia surged to US$25.8 billion, while Indonesian exports to China stagnated at $18.9 billion. The resulting $6.9 billion deficit, the highest recorded in recent history for such a short period, raises already rising concerns about asymmetry in the bilateral trade relationship. Although Indonesian authorities have attempted to downplay its significance by dismissing suggestions that this is due to the redirection of Chinese exports blocked by US and EU tariffs, the underlying realities paint a different picture. The sectors most affected by Chinese imports —namely, mechanical and electrical machinery, steel, automotive parts, and ceramics —are precisely those where China has long faced overcapacity. With Western markets erecting expanding barriers on Chinese goods in response to perceived unfair trade practices, Southeast Asia, particularly Indonesia, has become a convenient outlet for China's surplus industrial products. In effect, Chinese goods that cannot be sold in the US and EU are being channeled into the Indonesian market, either directly or via re-routing strategies through third countries. This dynamic mirrors the 2018–2020 period of the US-China trade war, when Southeast Asia similarly absorbed a disproportionate amount of redirected Chinese exports. Indonesia's manufacturing base has already begun to show signs of strain from the flood of cut-rate Chinese wares. The once-thriving textile sector, exemplified by the now-defunct Sritex conglomerate in Solo, has been unable to keep up with the price competition from cheap Chinese imports. Small and medium-sized manufacturers in ceramics and steel are also increasingly being squeezed by Made in China goods. Though the Indonesian government has responded by levying anti-dumping duties on select products, such as nylon film from China, Thailand and Taiwan, these actions have largely been reactive and insufficient to counteract the scale and pace of Chinese trade redirection. The longer this continues, the more it will undermine local industry, employment and economic self-sufficiency. The economic repercussions are only one layer of the problem. What makes this fissure particularly dangerous is its potential to metastasize into social tension. Indonesia's multi-ethnic composition includes a sizable Chinese-Indonesian minority that has historically been subject to scapegoating during economic downturns. The riots of May 1998, which led to the collapse of the Suharto regime, serve as a chilling reminder of how quickly economic grievances can morph into ethnic-based violence against ethnic Chinese. In the current climate of economic pressure and increasing unemployment—especially among urban manufacturing workers—there is a real risk that the narrative of Chinese imports 'destroying local industry' could morph into resentment directed at Chinese-Indonesian entrepreneurs, many of whom operate in retail, logistics and trade. In an age where social media can amplify divisive messaging in real-time, the potential for misinformation and targeted ethnic vilification should not be underestimated. At the regional level, Indonesia's predicament reflects a broader structural challenge in ASEAN. Countries like Malaysia, Thailand and Vietnam have also experienced spikes in Chinese imports, particularly in sectors like automobiles and electronics. The nature of these imports—often heavily subsidized and arriving in large quantities at prices below prevailing market rates—suggests deliberate Chinese dumping. Yet ASEAN's current mechanisms are ill-equipped to deal with these surges in a coordinated manner. Each country acts on its own, imposing unilateral anti-dumping tariffs or seeking redress through domestic trade tribunals, thereby diminishing the strength of a collective ASEAN-wide economic position. What is needed is not isolationism but a recalibration of engagement. Indonesia and ASEAN must articulate clearer expectations in their trade relationships with China. Fairness, reciprocity and respect for domestic industries must be at the heart of any economic partnership. The notion that Southeast Asia should serve as China's release valve for overproduction is not only economically detrimental but geopolitically short-sighted. It risks turning ASEAN from a central strategic partner into a passive buffer zone—absorbing external shocks without the tools to respond effectively. Equally important is ASEAN's need to revive its own internal trade capacities. The ASEAN Economic Community was envisioned to deepen intra-regional trade and investment, yet the share of intra-ASEAN trade has remained stagnant at around 22–24% over the past decade. This is far below the intra-regional trade levels of the EU, which stands at around 60%. Reducing non-tariff barriers, streamlining customs procedures and improving regional logistics are all urgent if ASEAN is to build internal economic resilience. Greater economic interdependence within ASEAN would not only mitigate vulnerability to external dumping but also foster shared growth that benefits smaller economies equally. For Indonesia, the road ahead demands bold policy interventions. The country must begin by strengthening its industrial strategy—reinvesting in productivity, technological upgrading and workforce development—so that its manufacturing sectors are not merely shielded but revitalized. Trade defense instruments must be improved, not only in terms of speed and scope but also in coordination with ASEAN partners. The government should also launch public education campaigns that preempt the ethnicization of economic issues. The messaging must be clear: this is not a conflict between ethnic groups but a structural issue in global trade dynamics that requires unity, not division. China, for its part, must recognize that sustaining goodwill in Southeast Asia cannot rely solely on infrastructure investment or diplomatic fanfare. It must pay heed to the social consequences of its trade behaviors. Dumping excess production into Indonesia and other ASEAN markets may offer short-term economic relief for Chinese exporters, but it risks breeding long-term resentment, social instability and strategic blowback in a region vital to China's Belt and Road Initiative ambitions. The growing trade imbalance between Indonesia and China is not yet a fracture—but it is undeniably a fissure, one that reveals the fragile interconnections between economic policy, social harmony and geopolitical alignment. Whether this fissure is widened or closed depends on the wisdom and coordination of both Indonesia's domestic leadership and ASEAN's collective diplomacy. To ignore it would be to misread not only the fragility of Indonesia's pluralistic society but also the limits of ASEAN's absorptive capacity. By addressing this issue with fairness, clarity and resolve, Indonesia can lead the region in forging a more balanced relationship with China—one that respects economic sovereignty, sustains regional stability and ultimately preserves the dignity of Southeast Asia's diverse peoples. Phar Kim Beng, PhD, is professor of ASEAN Studies, International Islamic University Malaysia and senior visiting fellow at the University of Cambridge. Luthfy Hamzah is senior research fellow of ASEAN Studies at Strategic Pan Indo Pacific Arena.
The Star
18-05-2025
- Business
- The Star
Indonesia eyes to become world's second biggest coffee producer
JAKARTA (Vietnam News/ANN): Indonesia is focusing on increasing domestic coffee production, with the goal of overtaking Vietnam as the world's second-largest coffee producer, according to Coordinating Minister for Food Zulkifli Hasan. With annual coffee production exceeding 700,000 tonnes, it currently ranks fourth globally, Zulkifli Hasan said, believing this figure can grow significantly with the right strategies in place. He shared that the strategy to increase productivity includes using better quality seedlings, improving post-harvest processing, and adopting more competitive packaging to increase the value of Indonesian coffee. According to the minister, Indonesia has vast areas of land suitable for coffee cultivation, and currently has 54 Geographical Indications (GI) for coffee, comprising 26 for Arabica, 24 for Robusta, three for Liberica, and one for Excelsa. Indonesia is currently behind Brazil, Vietnam, and Colombia in global coffee production. Vietnam, the second-largest producer, produces 1.8 million tonnes of coffee annually. Hasan called for stronger cooperation between the government and the private sector to unlock Indonesia's full coffee potential. According to the Central Statistics Agency (BPS) data, Indonesia exported 342,220 tonnes of coffee worth US$1.49 billion from January to September 2024. Meanwhile, the country imported 67,650 tonnes of coffee valued at US$319.84 million. The top export destinations of Indonesian coffee include the Philippines, the US, and Malaysia. - Vietnam News/ANN
Daily Express
11-05-2025
- Business
- Daily Express
Poverty rate reduction 4.5pc by 2029
Published on: Sunday, May 11, 2025 Published on: Sun, May 11, 2025 By: Jakarta Globe Text Size: Currently, 24.8m people, or 8.7pc of Indonesia's population live in poverty. Maluku and Papua have the highest poverty rate while Kalimantan has the lowest and Java has the largest number of poor people. JAKARTA: President Prabowo Subianto aims to eliminate extreme poverty by 2026 and reduce Indonesia's overall poverty rate from 8.7 percent to 4.5 percent by the end of his tenure in 2029, according to Chief Community Empowerment Minister Muhaimin Iskandar. 'Currently, 24.8 million people, or 8.7 percent of our population, live in poverty. By 2029, this figure should not exceed 4.5 percent, and ideally, we can reduce it even further,' Muhaimin said after chairing a ministerial meeting on poverty reduction Friday. The meeting focused on concrete measures to address poverty, with Muhaimin stressing the need for synergy between ministries and agencies, particularly with Chief Human Development Minister Pratikno and 17 other institutions. 'These ministries and agencies will play a key role in executing the President's directives. We will move forward together with a coordinated strategy to tackle poverty and extreme poverty,' he added. A key instrument in this effort is the National Social and Economic Single Database (DTSEN), which Muhaimin said would be continuously validated to ensure accuracy and help direct aid to the right recipients. He cited the Housing Ministry's BSPS housing incentives and housing subsidy programs as examples of initiatives that rely on accurate data to ensure aid reaches those who need it most. Housing Minister Maruarar Sirait welcomed the initiative, saying that reliable data is crucial for effectively implementing government programs. 'We can now proceed with BSPS and housing subsidies as directed by President Prabowo, ensuring precise targeting,' Maruarar said. He said the database would prevent misallocation of aid, ensuring only those in need receive assistance. 'This data is crucial to prevent situations where the wealthy benefit while the poor are left out,' he added. According to the Central Statistics Agency (BPS), Indonesia's poverty rate fell to 8.57 percent in September 2024, the lowest level since poverty data was first recorded in 1960. This marks a 0.46 percentage point decline from March 2024 and a 0.79 percentage point drop from the previous year. The decrease was driven by strong economic growth, with the country's GDP expanding by 5.35 percent in the third quarter of 2024. As of September 2024, the poverty line was set at Rp 595,242 ($36.5) per capita per month, with rice, cigarettes, housing, and fuel contributing the most to household expenses. Maluku and Papua had the highest poverty rate at 18.62 percent, while Kalimantan had the lowest at 5.3 percent. However, Java had the largest number of poor people, with 12.62 million living in poverty, while Kalimantan had the fewest at 0.91 million. * Follow us on Instagram and join our Telegram and/or WhatsApp channel(s) for the latest news you don't want to miss. * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
Asia Times
22-04-2025
- Business
- Asia Times
Indonesia bracing for flood of rerouted Chinese exports
JAKARTA – At Indo Intertex, a vast textiles and garments trade exhibition staged this month in Jakarta, the complexity and controversy of Indonesia-China trade were on full display. 'The market is not good, everyone knows that,' said Hery, who sells textile manufacturing machinery to local factories and, like many Indonesians, goes by one name. 'There's no money, maybe because there are so many products coming in from China.' Behind him stood a vast knitting machine produced by Hengye Mach, a Chinese company producing the machines for which Hery works as a local representative. At the exhibition, Chinese companies occupied an apparent majority of the thousands of booths touting machines for various textile-producing processes – spinning, dyeing, printing, weaving and finishing – and selling fabrics ranging from polyester to cotton to silk. To be sure, Indonesian manufacturers were complaining that waves of low-cost Chinese goods – often smuggled into the country to avoid high tariffs – were driving them to the wall even before US President Donald Trump's 'Liberation Day' announcement of reciprocal tariffs, including a punitive 145% tax on all Chinese goods. But many now worry floods of cheap Chinese imports, once destined for the US, will soon overwhelm local markets, forcing deindustrialization across a wide swath of businesses, not least the nation's iconic textiles. Managing this is a delicate issue for Indonesia. China is Indonesia's largest trade partner. In 2024, Indonesia imported US$72.7 billion worth of goods from China – mainly telecoms equipment, computers and machinery, according to Indonesia's Central Statistics Agency (BPS). In turn, it exported and exported $62.4 billion to China – mainly coal, palm oil and ferroalloys. China is also a key partner and investor in a number of strategic sectors in Indonesia, including infrastructure, nickel and electric vehicles. BYD is already building a factory in Indonesia. In June last year, then-Trade Minister Zukifli Hasan announced plans to impose tariffs of up to 100-200% on a variety of Chinese goods from China, including textiles and ceramics. The idea was hastily shot down by other ministers who were wary of upsetting China, inviting retaliation from one of the nation's leading investors. But local calls for protection from cheap Chinese goods have persisted. Those calls have come from the textiles sector in particular, one of the nation's largest domestic employers. They became more pronounced after major producer Sritex declared bankruptcy amid the closure of several other factories that could compete on price with China's cheaper wares. Chinese goods are often blamed with claims of rampant smuggling to evade the hefty duties Indonesia imposes on such goods. In December, President Prabowo Subianto, who has pushed the government to save Sritex, took a hard line on the issue. 'Textile smuggling threatens our textile industry, threatens the lives of hundreds of thousands of our workers,' he declared. 'But if it threatens the lives of the Indonesian people, if necessary, we will sink those [smuggling] ships!' he said firmly. If only it were so simple. Before Prabowo took office, former Coordinating Minister Luhut Binsar Pandjitan revealed a Chinese proposal to establish new Chinese textile factories in Kertajati, Majalengka, with the potential to employ 108,000 workers. An apparent separate proposal led by Chinese investors sought to establish textile factories across Subang, Karawant, Brebes, Solo and Sukhoharjo, spanning the entire textile production chain from midstream to upstream processes and with an eye on exports. Whether Chinese-owned factories in Indonesia will be able to elude the 145% tariffs on Chinese goods is an open question as Trump intensifies his trade war by calling on nations to impose their own 'secondary tariffs' on Chinese producers. Most of the goods that Indonesia exports to the US are low-end manufactured goods. In 2024, Indonesia exported $26.3 billion worth of products to the US, according to BPS. Manufactured products like electronics, garments and footwear made up the majority of those shipments. Demand for such goods in China from Indonesia is fairly low. Indeed, that same year, while Indonesia exported some $70.7 billion worth of goods to China, 90.9% were commodities like iron and steel, coal, nickel, palm oil, paper pulp, foodstuffs and wood, vegetable and animal products. All this may complicate China's attempts to seize upon America's aggressive trade demands to position itself as a reliable and lucrative alternative market. 'In the face of shocks to global order and economic globalization, China and Malaysia will stand with countries in the region to combat the undercurrents of geopolitical confrontation, as well as the counter-currents of unilateralism and protectionism,' declared Xi at a dinner with Malaysian Prime Minister Anwar Ibrahim. 'Together, we will safeguard the bright prospects of our Asian family,' he added. Indonesia, as the largest country in the region, forms part of these plans. While Xi did not visit Jakarta during this three-country swing through the region, he spoke with President Prabowo, who has already visited China twice since his election last year. On April 21, China's Foreign Minister Wang Yi said at a press conference with his Indonesian counterpart that China and Indonesia should oppose 'any form' of unilateralism and trade protectionism. The two sides should jointly accelerate regional economic integration and maintain the stability of industrial chains and supply chains, he said. But as Indonesia looks to deal with Trump's tariff shock, China may not be its partner of choice. The idea that China's tariff troubles could ultimately be Indonesia's gain is already filtering down, despite the reciprocal 36% Indonesian goods now face. Mari Pangestu, a veteran technocrat newly appointed as the president's Special Envoy for International Trade and Multilateral Cooperation, cited Japan, South Korea and Australia as the best target markets to absorb Indonesian goods usually sold to America. Meanwhile, negotiations for a trade deal with the European Union seem to be gathering new momentum, talks that have stalled on various contentious issues ranging from palm oil cultivation techniques to resource nationalism since 2016. There has even been some talk that Ind-nesia might join the Trans-Pacific Partnership – an 11-country trade pact including a cluster of Southeast Asian countries alongside Japan, Australia and Canada. With regard to China, however, the focus has been different. Looking to reassure pressured local businesses, Pangetsu has said trade liberalization measures, when implemented, will be accompanied by plans to improve local anti-dumping laws, with the implicit target being Chinese goods. Pangetsu has suggested Indonesia could actually benefit from the trade war by encouraging companies manufacturing for the US market to relocate from China to Indonesia. Back at the textile expo, Kasikin, an independent wholesaler, is already thinking along these lines. 'Since the pandemic, our exports have been small,' he reflected. But 'I heard from a friend in this trade war America wants to hit China. There could be a profit for Indonesia – reindustrialization. China could be forced to open factories here.'
